Drinks groups hit back over tax claims

Alcohol smuggling in the UK is not nearly as widespread as the Government suggests, the drinks industry has said.

Alcohol smuggling in the UK is not nearly as widespread as the Government suggests, the drinks industry has said.

Giving evidence yesterday to an inquiry by the Treasury Select Sub-committee into excise duty fraud, the Scotch Whisky Association (SWA) told MPs that government estimates of spirits smuggling were wildly wrong.

The SWA believes smuggled goods comprise2 per cent of the market, while the Government's latest estimates suggest 7 per cent of spirits consumed in the UK are from illicit trade, costing more than £250m a year in lost revenues. It said recently the figure could be 16 per cent.

Ian Shearer, of the SWA, said: "Supermarket and off-licence chains make up about 85 per cent of the market. Their supply chains are tightly controlled and there is very little risk of smuggled goods going on their shelves. The remainder is through corner shops, so if 16 per cent of the market is smuggled, that would mean every bottle in every corner shop was illegal. Even saying that half of every corner shop's stock is smuggled is implausible."

Smuggling has dropped significantly from its peak in the late 1990s, but the SWA and the British Beer and Pubs Association yesterday hit out at Customs and Excise for not doing enough to regulate third-party warehouses used to store and distribute goods. It is from these that shipments can leak back into the UK market without duty being paid. Ian Good, of the SWA, said: "We know of at least one third-party warehouse where the director of it has a criminal record for fraud."

The SWA wants Customs and Excise to put warehouse owners through compliance tests, companies selling and distributing spirits to be registered, and companies using third-party warehouses to give financial guarantees that their goods will end up in the legitimate trade.